Barry McVay's FEDERAL CONTRACTS DISPATCH

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that the FAR be amended to clarify the statutory requirements for use of U.S.-flag vessels in the transportation of supplies by sea. The FAR presently waives these requirements for subcontracts for the acquisition of commercial items.

FOR FURTHER INFORMATION CONTACT: Ralph De Stephano, Procurement Analyst, 202-501-4755.

SUPPLEMENTAL INFORMATION: 10 U.S.C. 2631 and 46 U.S.C. 1241(b) provide a preference for use of U.S.-flag vessels for ocean transportation of supplies purchased under government contracts. FAR Part 12 presently waives the requirements of 46 U.S.C. 1241(b) for subcontracts for the acquisition of commercial items. DFARS Part 212, Acquisition of Commercial Items, and DFARS Part 247, Transportation, waive the requirements of 10 U.S.C. 2631 for subcontracts for the acquisition of commercial items with certain exceptions that were added by a final rule effective March 16, 2000. The exceptions were added to ensure compliance with 10 U.S.C. 2631 for ocean cargoes clearly destined for DOD use.

This rule proposes to amend paragraph (a) of FAR 12.504, Applicability of Certain Laws to Subcontracts for the Acquisition of Commercial Items, by adding 10 U.S.C. 2631 to the list of laws not applicable to subcontracts for the acquisition of commercial items or commercial components (paragraph (a) already includes 46 U.S.C. 1241(b)). However, to reflect the recent clarifying changes to the DFARS, paragraph (d) of FAR 47.504, Exceptions, and paragraph (e) of FAR 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels, would be amended by adding the following exceptions to the U.S.-flag vessel waiver for subcontracts of commercial items or commercial components:

Subcontracts under construction contracts.

Shipments of commercial items that are --
"(i) Items the contractor is reselling or distributing to the Government without adding value (see FAR 12.501(b)). Generally, the contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment; or
"(ii) Shipped in direct support of U.S. military --
"(A) Contingency operations;
"(B) Exercises; or
"(C) Forces deployed in connection with United Nations or North Atlantic Treaty Organization humanitarian or peacekeeping operations."

Because of this change, the entries in FAR 12.504(a) for 10 U.S.C. 2631 and 46 U.S.C. 1241(b) would include "(except for the types of subcontracts listed at [FAR] 47.504(d)".

In addition, the existing Alternate II of FAR 52.247-64, which currently is to be used in construction contracts in which supplies, materials, or equipment require ocean transportation, would be deleted as unnecessary, and replaced with a new Alternate II which would be used if any of the supplies to be transported are commercial items that are shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in connection with United Nations or North Atlantic Treaty Organization humanitarian or peacekeeping operations. The prescription for Alternate II of FAR 52.247-64 in paragraph (a)(3) of FAR 47.504, Contract Clauses, would be revised accordingly.

Finally, FAR
2.101, Definitions, would be revised to add definitions for "contingency operation" and "humanitarian or peacekeeping operation."